Determinants of Market Integration and Price Transmission in Indonesia

This paper investigates the determinants of price differences and market integration among Indonesian provinces, using data from retail cooking oil, rice and sugar markets during the period 1993-2007, and from wholesale maize and soybean markets du...

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Main Authors:	Varela, Gonzalo, Aldaz-Carroll, Enrique, Iacovone, Leonardo
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	AGRICULTURAL ECONOMICS ALLOWANCE ARBITRAGE AVERAGE PRICE AVERAGE PRICES CHANGES IN PRICES CLIMATE COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE DATA AVAILABILITY DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DOMESTIC MARKETS DOMESTIC PRICES DOMESTIC PRODUCTION DRIVERS EFFICIENT MARKETS ELASTICITIES GOOD TRANSPORT GOVERNMENT INTERVENTION INCOME INFORMATION FLOWS INTERNATIONAL MARKET INVESTMENT CLIMATE LOWER PRICE MARKET DEVELOPMENT MARKET INFORMATION MARKET INTEGRATION MARKET POTENTIAL MARKET POWER MARKETING NATURAL RESOURCE OPEN ECONOMY OUTPUT PER CAPITA INCOME POLICY IMPLICATIONS POLITICAL ECONOMY PRICE BEHAVIOR PRICE DIFFERENTIAL PRICE DIFFERENTIALS PRICE DISCRIMINATION PRICE MOVEMENTS PRICE SERIES PRICE SETTING PRIVATE INVESTMENT PRODUCER PRICE PRODUCT QUALITY PUBLIC POLICY PUBLIC WORKS PURCHASING PURCHASING POWER QUALITY OF TRANSPORT RAILWAY REMOTE REGION RETAIL ROAD ROAD TRANSPORT ROADS SALES SPREAD STOCKS TRANSACTION COSTS TRANSPORT COSTS TRANSPORT INFRASTRUCTURE TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS VOLATILITY WORLD MARKET WORLD MARKETS
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16396524/determinants-market-integration-price-transmission-indonesia http://hdl.handle.net/10986/9312

id	okr-10986-9312
recordtype	oai_dc
spelling	okr-10986-93122021-04-23T14:02:45Z Determinants of Market Integration and Price Transmission in Indonesia Varela, Gonzalo Aldaz-Carroll, Enrique Iacovone, Leonardo AGRICULTURAL ECONOMICS ALLOWANCE ARBITRAGE AVERAGE PRICE AVERAGE PRICES CHANGES IN PRICES CLIMATE COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE DATA AVAILABILITY DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DOMESTIC MARKETS DOMESTIC PRICES DOMESTIC PRODUCTION DRIVERS EFFICIENT MARKETS ELASTICITIES GOOD TRANSPORT GOVERNMENT INTERVENTION INCOME INFORMATION FLOWS INTERNATIONAL MARKET INVESTMENT CLIMATE LOWER PRICE MARKET DEVELOPMENT MARKET INFORMATION MARKET INTEGRATION MARKET POTENTIAL MARKET POWER MARKETING NATURAL RESOURCE OPEN ECONOMY OUTPUT PER CAPITA INCOME POLICY IMPLICATIONS POLITICAL ECONOMY PRICE BEHAVIOR PRICE DIFFERENTIAL PRICE DIFFERENTIALS PRICE DISCRIMINATION PRICE MOVEMENTS PRICE SERIES PRICE SETTING PRIVATE INVESTMENT PRODUCER PRICE PRODUCT QUALITY PUBLIC POLICY PUBLIC WORKS PURCHASING PURCHASING POWER QUALITY OF TRANSPORT RAILWAY REMOTE REGION RETAIL ROAD ROAD TRANSPORT ROADS SALES SPREAD STOCKS TRANSACTION COSTS TRANSPORT COSTS TRANSPORT INFRASTRUCTURE TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS VOLATILITY WORLD MARKET WORLD MARKETS This paper investigates the determinants of price differences and market integration among Indonesian provinces, using data from retail cooking oil, rice and sugar markets during the period 1993-2007, and from wholesale maize and soybean markets during the period 1992-2006. The authors measure the degree of integration using co-integration techniques, and calculate average price differences. They use regression analysis to understand the drivers of price differences and market integration. For rice and sugar, they find wide market integration and low price differences, in the range of 5-12 percent. For maize, soybeans and cooking oil, they find less integration and higher price differences (16-22 percent). Integration across provinces is explained by the remoteness and quality of transport infrastructure of a province. Price differences across provinces respond to differences in provincial characteristics such as remoteness, transport infrastructure, output of the commodity, land productivity and income per capita. 2012-06-29T18:51:08Z 2012-06-29T18:51:08Z 2012-06 http://documents.worldbank.org/curated/en/2012/06/16396524/determinants-market-integration-price-transmission-indonesia http://hdl.handle.net/10986/9312 English en_US Policy Research Working Paper; No. 6098 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Indonesia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGRICULTURAL ECONOMICS ALLOWANCE ARBITRAGE AVERAGE PRICE AVERAGE PRICES CHANGES IN PRICES CLIMATE COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE DATA AVAILABILITY DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DOMESTIC MARKETS DOMESTIC PRICES DOMESTIC PRODUCTION DRIVERS EFFICIENT MARKETS ELASTICITIES GOOD TRANSPORT GOVERNMENT INTERVENTION INCOME INFORMATION FLOWS INTERNATIONAL MARKET INVESTMENT CLIMATE LOWER PRICE MARKET DEVELOPMENT MARKET INFORMATION MARKET INTEGRATION MARKET POTENTIAL MARKET POWER MARKETING NATURAL RESOURCE OPEN ECONOMY OUTPUT PER CAPITA INCOME POLICY IMPLICATIONS POLITICAL ECONOMY PRICE BEHAVIOR PRICE DIFFERENTIAL PRICE DIFFERENTIALS PRICE DISCRIMINATION PRICE MOVEMENTS PRICE SERIES PRICE SETTING PRIVATE INVESTMENT PRODUCER PRICE PRODUCT QUALITY PUBLIC POLICY PUBLIC WORKS PURCHASING PURCHASING POWER QUALITY OF TRANSPORT RAILWAY REMOTE REGION RETAIL ROAD ROAD TRANSPORT ROADS SALES SPREAD STOCKS TRANSACTION COSTS TRANSPORT COSTS TRANSPORT INFRASTRUCTURE TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS VOLATILITY WORLD MARKET WORLD MARKETS
spellingShingle	AGRICULTURAL ECONOMICS ALLOWANCE ARBITRAGE AVERAGE PRICE AVERAGE PRICES CHANGES IN PRICES CLIMATE COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE DATA AVAILABILITY DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DOMESTIC MARKETS DOMESTIC PRICES DOMESTIC PRODUCTION DRIVERS EFFICIENT MARKETS ELASTICITIES GOOD TRANSPORT GOVERNMENT INTERVENTION INCOME INFORMATION FLOWS INTERNATIONAL MARKET INVESTMENT CLIMATE LOWER PRICE MARKET DEVELOPMENT MARKET INFORMATION MARKET INTEGRATION MARKET POTENTIAL MARKET POWER MARKETING NATURAL RESOURCE OPEN ECONOMY OUTPUT PER CAPITA INCOME POLICY IMPLICATIONS POLITICAL ECONOMY PRICE BEHAVIOR PRICE DIFFERENTIAL PRICE DIFFERENTIALS PRICE DISCRIMINATION PRICE MOVEMENTS PRICE SERIES PRICE SETTING PRIVATE INVESTMENT PRODUCER PRICE PRODUCT QUALITY PUBLIC POLICY PUBLIC WORKS PURCHASING PURCHASING POWER QUALITY OF TRANSPORT RAILWAY REMOTE REGION RETAIL ROAD ROAD TRANSPORT ROADS SALES SPREAD STOCKS TRANSACTION COSTS TRANSPORT COSTS TRANSPORT INFRASTRUCTURE TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS VOLATILITY WORLD MARKET WORLD MARKETS Varela, Gonzalo Aldaz-Carroll, Enrique Iacovone, Leonardo Determinants of Market Integration and Price Transmission in Indonesia
geographic_facet	East Asia and Pacific Indonesia
relation	Policy Research Working Paper; No. 6098
description	This paper investigates the determinants of price differences and market integration among Indonesian provinces, using data from retail cooking oil, rice and sugar markets during the period 1993-2007, and from wholesale maize and soybean markets during the period 1992-2006. The authors measure the degree of integration using co-integration techniques, and calculate average price differences. They use regression analysis to understand the drivers of price differences and market integration. For rice and sugar, they find wide market integration and low price differences, in the range of 5-12 percent. For maize, soybeans and cooking oil, they find less integration and higher price differences (16-22 percent). Integration across provinces is explained by the remoteness and quality of transport infrastructure of a province. Price differences across provinces respond to differences in provincial characteristics such as remoteness, transport infrastructure, output of the commodity, land productivity and income per capita.
format	Publications & Research :: Policy Research Working Paper
author	Varela, Gonzalo Aldaz-Carroll, Enrique Iacovone, Leonardo
author_facet	Varela, Gonzalo Aldaz-Carroll, Enrique Iacovone, Leonardo
author_sort	Varela, Gonzalo
title	Determinants of Market Integration and Price Transmission in Indonesia
title_short	Determinants of Market Integration and Price Transmission in Indonesia
title_full	Determinants of Market Integration and Price Transmission in Indonesia
title_fullStr	Determinants of Market Integration and Price Transmission in Indonesia
title_full_unstemmed	Determinants of Market Integration and Price Transmission in Indonesia
title_sort	determinants of market integration and price transmission in indonesia
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/06/16396524/determinants-market-integration-price-transmission-indonesia http://hdl.handle.net/10986/9312
_version_	1764409277291692032

Determinants of Market Integration and Price Transmission in Indonesia

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